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"Wall Street cheered the toxic mortgage plan because what it means for the investors who might buy the mortgages is one very sweet deal," concluded Wyatt Andrews in a What It Means explainer on CBS. His evidence of Wall Street's approval was the fact that the Dow Jones Industrial Average rose 497 points to close at 7775 in a single day. ABC's Betsy Stark (no link) concurred that the buying on Wall Street represented "an enthusiastic vote of confidence." What about the banks? Will they be willing to sell their paper to the PPIP? "It is premature to comment"--Wells Fargo; "studying the details"--Bank of America; "too early to speculate"--Citigroup. ABC's George Stephanopoulos advised us to wait until April when the Treasury Department's stress tests of the major banks is complete: "We will find out how much more capital if any those banks will need."
Liz Ann Sonders, the chief investor at Charles Schwab, came up with a different explanation for the bullishness on Wall Street in an interview with CBS anchor Katie Couric. PPIP "effectively takes nationalization, full-blown nationalization, off the table--which I think is good." On NBC, Steve Liesman, CNBC's economist, repeated what he was told by both the Treasury Department and the FDIC, which happened to confirm Sonders' take: "The alternative is even worse, the government owning these assets outright." Yet he then quoted them contradicting themselves: "The taxpayer could benefit on the upside when it comes to these assets profiting." If that should happen, why would we want to share those benefits with private capital? Why not keep it all for ourselves?
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